Euro zone leaders have piled pressure on Greek prime minister Alexis Tsipras to adopt loan preconditions and austerity measures to keep Greece in the euro.
As Brussels talks continued into the early hours, Mr Tsipras was facing the prospect of a split in his Syriza party should he agree to creditor terms for a third bailout of up to €86 billion.
A week ago Greek voters rejected continuing talks on an extended second programme.
But tense euro zone finance minister talks in Brussels ended on Sunday afternoon with Athens agreeing to the terms of a loan application from the ESM bailout fund, including tax increases and pension cuts and measures to ensure compliance.
Mr Tsipras, arriving in Brussels to negotiate the final terms, said he was looking for a “fair compromise” with other euro leaders.
But senior figures in his radical left Syriza party accused Germany and other creditors of trying to humiliate Athens by insisting it enact "punitive" reforms within days.
"What is at play here is an attempt to humiliate Greece and Greeks, or to overthrow the Tsipras government," said Dimitris Papadimoulis, a Syriza MEP.
Austerity measures
The Greek parliament voted on Saturday to authorise the government to enter exploratory talks with its EU and IMF creditors, but 17 Syriza MPs refused to back the vote.
A further 15 Syriza MPs have indicated they will rebel against fresh austerity measures. If he loses his majority in parliament, Mr Tsipras could invite opposition parties to join a government of national unity or call fresh elections.
The draft document for talks on a third bailout sees IMF participation as a precondition.
Measures proposed include: a streamlined VAT-collection system and broader tax base; cuts to improve the pension system’s sustainability; a civil code overhaul to speed up trials and cut costs of legal action.
To prevent a repeat of previous stand-offs, a new programme would oblige Athens to submit draft legislation to its creditors before parliament.
In a final, provisional, line the draft document says failure to reach agreement would see Greece offered “swift negotiations on a time-out from the euro area”.
Leaked by Berlin
This line first appeared in a document leaked by Berlin’s finance ministry to a German Sunday newspaper.
The document was not presented at weekend eurogroup talks, and its proposed temporary Grexit caused a stir among EU leaders arriving in Brussels.
French president Francois Hollande said there was no such thing as a temporaryGreek exit, only a permanent one. That would "mean Europe would go backward", he said, "and that I don't want".
But Chancellor Angela Merkel insisted that she would not back a deal "at any price".
“We have to make sure that the benefits outweight the costs for the future of Greece and for the principles of co-operation in the euro zone,” she said.
Her officials played down “time-out” option last night, saying that, if adopted, it would only be possible to activate with Greek consent.
Taoiseach Enda Kenny urged the Syriza government to move as soon as today to vote on a opening third bailout talks.
“I’d like to see them demonstrating, starting in their parliament, they are serious about implementing the changes – legislative and structural – that need to be put in place, and there are many of them,” Mr Kenny added.
